Toyota ends expansion freeze with new plants in Mexico, China

By Chang-Ran Kim

3 Min Read

TOKYO, April 15 (Reuters) - Toyota Motor Corp announced plans for new factories in Mexico and China on Wednesday, ending a self-imposed expansion freeze to fend off rivals racing to overtake it as the world's top-selling automaker.

Confirming earlier Reuters reports, the Japanese manufacturer said it would build a $1 billion plant with the capacity to produce 200,000 cars a year in the central Mexican state of Guanajuato.

Toyota also said it would build its Corolla model there from 2019, transferring production from its Cambridge, Ontario plant in Canada as part of a realignment of its North American manufacturing operations. The firm's first passenger car plant in Mexico would create about 2,000 jobs, it said in a statement.

Burned by excess capacity after the global financial crisis and a huge recall shortly after, President Akio Toyoda paused new factory investment and called instead for making better use of existing plants. Toyota said it was now using about 90 percent of its total manufacturing capacity, versus about 70 percent in 2009.

Toyota also used the time to draw up a fresh blueprint for new factories under its latest initiative, dubbed Toyota New Global Architecture (TNGA), to overhaul the way it develops and builds cars.

Its renewed investment comes as rivals Volkswagen AG and General Motors Co steadily add plants as they vie for the industry's sales crown.

COMPACT PLANT

Toyota said the Guanajuato factory would be the first designed to TNGA specifications, and that initial investment would likely be about 40 percent less than comparable investments in 2008. The Guanajuato site, which will be compact and have none of the overhead conveyors common in car plants, would be a model for its other factories, Toyota said.

To boost efficiency in the region, Toyota said some Corolla production from Ontario would also be transferred to Mississippi. The Ontario plant would then focus on higher-end, mid-sized models along with factories in Kentucky and Indiana, Toyota said.

In China, Toyota said it would spend about 52.5 billion yen ($440 million) to add a new facility and third line at its factory in Guangzhou, owned jointly with Guangzhou Automobile Group Co Ltd. The line, to be completed by the end of 2017, would start production as needed from that year.

The new line would have production capacity of about 100,000 cars a year, and could be expanded if needed, Toyota said.

Toyota said it would also aim to make the existing Guangzhou lines more efficient, including through more automation. Excess labour would then be allocated to the new line, meaning no new jobs would be added.